Capitol Alert

Another Prop. 30 income tax increase now aiming for 2016

Gov. Jerry Brown thanks supporters for their work on his temporary tax hike initiative, Prop. 30, in 2012.
Gov. Jerry Brown thanks supporters for their work on his temporary tax hike initiative, Prop. 30, in 2012. Associated Press file

A group of health and youth advocates on Monday introduced a ballot initiative to expand and make permanent the Proposition 30 income tax increases on the state’s highest earners.

The proposal, led by the California Hospital Association, the Service Employees International Union-United Healthcare Workers West and Common Sense Kids Action, is the second tax measure aiming for next year’s ballot that would extend the 2012 income tax increase.

Similar to Proposition 30, the latest measure would increase taxes on couples earning at least $580,000 annually. Those taxes were set to expire at the end of 2018. It also would impose even higher income tax rates for so-called “super-earner” couples that make more than $2 million a year.

Half of the estimated $10 billion a year in annual revenues would go to K-14 education; 40 percent to California’s Medi-Cal program for low-income people; and the remainder to prekindergarten and early childhood development programs. And it calls for a “rainy day” budget reserve modeled on last fall’s Proposition 2.

California has more kids living in poverty and greater income inequality than virtually any other state, Jim Steyer of Common Sense Kids Action said in a statement announcing the tax increase. Steyer said the measure asks the wealthiest to “pay a little more so we can make the investments every California kid needs to have a great start in life.”

Money from the Invest in California’s Children Act could go to any number of health care-related programs, including to reimburse physicians and other health care workers, who see Medi-Cal patients or to replace a tax on managed-care organizations that expires June 30.

The move creates the potential for another tax-hike clash between well-heeled and well-connected interest groups operating across the state. In 2012, Proposition 30 championed by Gov. Jerry Brown appeared on the same ballot as the unsuccessful Proposition 38 tax hike supported largely by Molly Munger.

It’s unclear whether Brown, who is termed out in 2018, will get involved this time. He said repeatedly that his 2012 tax measure was temporary and should remain so.

Last week, the coalition including the California Teachers Association, Service Employees International Union, and other public safety and public employees’ unions, introduced their version of a Proposition 30 income-tax extension that would run through 2030. The estimated $7 billion to $9 billion in annual proceeds would be deposited into an account for K-14 schools.

That campaign is being run by Gale Kaufman, who at the time stressed its temporary nature along with its promise to help maintain a balanced budget, and to prevent deep cuts to programs affecting students, seniors, working families and health care.

Both measures would allow the sales tax increase in Proposition 30 to expire in 2016.

The measure unveiled Monday is being guided by the SCN Strategies team led by Ace Smith, who ran the original Proposition 30 campaign and Brown’s gubernatorial campaigns. Its proponents stressed the need for sustained education and heath care funding given the state’s crowded classrooms and its near-bottom rankings on Medicaid spending.

If both measures qualify for the ballot and pass, the one with the most votes would prevail.

Christopher Cadelago: 916-326-5538, @ccadelago

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